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Banks are special. A bank is apparently institution of trust that also has role as intermediary agent and enabling payment and settlement system. Banks have also vital role in an economy as transmission channel for effective monetary policy. With these vital functions, sound banks are vital for stability of financial system and economy. To create sound and stable banking system, an economy needs to exercise effective regulatory and supervisory regime. Efforts to supervise and regulate banks by Bank Indonesia are centered to provide strong incentives for banks maintain their level of soundness.
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